Palin: End crony capitalism

posted at 10:55 am on April 23, 2010 by Ed Morrissey

In times gone by, the Democratic Party used to complain that the GOP was the party of “crony capitalism.” These days, with the political connections of Goldman Sachs and other Wall Street firms to the Obama administration and to Democrats, the least that can be said is that the playing field has been leveled. Both Republicans and Democrats spent hundreds of billions on bailouts of supposedly private corporations in 2008 and 2009, saddling American taxpayers with enormous debt while protecting big contributors from utter financial collapse.

Sarah Palin issued a rebuke to the entire practice of crony capitalism from her Facebook platform this morning, and demanded an end to the “too big to fail” mentality that results from it:

The current debate over financial reform demonstrates what happens when political leaders react to a crisis with a raft of new regulations. First off, the people involved in writing government regulations are often lobbyists from the very industry that the new laws are supposed to regulate, and that’s been the case here. It should surprise no one that financial lobbyists are flocking to DC this week. Of course, the big players who can afford lobbyists work the regulations in their favor, while their smaller competitors are left out in the cold. The result here are regulations that institutionalize the “too big to fail” mentality.

Moreover, the financial reform bill gives regulators the power to pick winners and losers, institutionalizing their ability to decide “which firms to rescue or close, and which creditors to reward and how.” Does anyone doubt that firms with the most lobbyists and the biggest campaign donations will be the ones who get seats in the lifeboat? The president is trying to convince us that he’s taking on the Wall Street “fat cats,” but firms like Goldman Sachs are happy with federal regulation because, as one of their lobbyists recently stated, “We partner with regulators.”

They seem to have a nice relationship with the White House too. Goldman showered nearly a million dollars in campaign contributions on candidate Obama. In fact, J.P. Freire notes that President Obama received about seven times more money from Goldman than President Bush received from Enron. Of course, it’s not just the donations; it’s the revolving door. You’ll find the name Goldman Sachs on many an Obama administration résumé, including Rahm Emanuel’s and Tim Geithner’s chief of staff’s. …

Large firms like Goldman Sachs usually back regulation for a couple of rational reasons. Regulation tends to favor the status quo, and since they already occupy a large position in the industry, Goldman Sachs would prefer to see that position institutionalized. Because of their size, the compliance costs don’t impact them as much as they do with smaller competitors, making the smaller companies less of a threat. Mostly, though, the large players usually get deeply involved in supporting the politicians in both parties that write the regulations, and that usually means the regulations wind up working for them than against them.

That’s the kind of crony capitalism about which Palin warns in her essay, and she saw it first hand in Alaska. It creates firms that become “too big to fail,” not necessarily for economic reasons but for political reasons. Excessively regulating industries to promote the interests of its largest players helps make those firms so large that their collapses would create outsized effects on the American economy.

In other words, if you want to end “too big to fail,” getting the endorsement of Goldman Sachs on regulatory changes is probably a counterindication rather than a good sign.

That isn’t to say that some regulatory changes shouldn’t be made. The derivatives market went largely unsupervised in the years preceding the collapse, for instance, and better oversight is needed on that segment. However, that was a secondary problem in the financial meltdown. The primary problem was the government intervention in the lending markets that created an irrational bubble in housing — driven by regulation that attempted to expand home ownership by indemnifying lenders against losses on marginal home loans. That was also crony capitalism, making lenders big financial players and giving firms like Goldman Sachs opportunities to make billions on the junk bonds produced by the process.

We need rational and limited government oversight to ensure that investors don’t get defrauded out of their money. What we don’t need is the continuation of government picking winners and losers in markets, if for no other reason than because the 2008 collapse showed just how bad it is at making those choices.

Blowback

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For those who think Palin’s too much of a lightweight to run for POTUS, all the woman has to do is commit these Facebook posts to memory(or upload them into a teleprompter) and recite them on the campaign trail. She knocks it out of the park every time with these.

Mostly, though, the large players usually get deeply involved in supporting the politicians in both parties that write the regulations, and that usually means the regulations wind up working for them than against them.

Yes the larger players have already gamed the system before lobbying for regulations. If you already know and prepare for the regulations that are being introduced you already have the advantage.

This is what I truly admire about Sarah Palin. Whatever faults she has, she fervently and capably articulates the interests of the middle class — me, for example. This kind of collusion between government and big business at the expense of everyone else is a perfect example.

Just a reminder for all those people who will slobber over this facebook posting, certain that it’s the most brilliant piece of writing since Palin’s last facebook posting, this is, like every other posting she’s made, so generic in tone it could have been written by any conservative-minded writer on earth.

Without a solid resume to back up what is essentially generic boilerplate postings, I see no reason to think she has anything special to offer the country in terms of governance.

No one will ever convince me that the economy would have collapsed without TARP. It’s my version of truthers/birthers only those two things only cost credibility not trillions of dollars and millions of jobs of the citizens.

If we don’t elect Palin, then we need someone who understands and is not swayed by these insiders.
Palin is looking and sounding more and more like the person who can lead us out of this muck.
You can bet Mitt won’t take down these big money guys, Huck runs from them, Paul is just all mouth with no leadership skills.
Palin takes the lead, sets the standard, and isn’t afraid of “losing” votes, she states it as it is.

Yeah, but she’s so divisive and stuff, and doesn’t know a lot, and she isn’t capable or ready for the big time.
The world would do well to have this talented young lady in charge. Who else stands up and speaks the truth, who? Sarah you tell it like it is you’re over the target now bombs away!

No one will ever convince me that the economy would have collapsed without TARP. It’s my version of truthers/birthers only those two things only cost credibility not trillions of dollars and millions of jobs of the citizens.

Cindy Munford on April 23, 2010 at 11:08 AM

I agree now with you…TARP kept their supporters alive, kept their cash cow delivering the goods.

Gosh, it’s so hard to keep it all straight when the criticisms contradict each other!

Proud Rino on April 23, 2010 at 11:07 AM

It’s really pretty easy. My junior high age children could even teach you. Look for the common denominator: increasing government power and control, with correspondingly greater opportunities for corruption and other unethical practices. It’s not exactly rocket science.

Just a reminder for all those people who will slobber over this facebook posting, certain that it’s the most brilliant piece of writing since Palin’s last facebook posting, this is, like every other posting she’s made, so generic in tone it could have been written by any conservative-minded writer on earth.

You go ahead and regulate our competitors, and we’ll pretend to be angry about it.
RBMN on April 23, 2010 at 11:07 AM

It’s called “sub-optimization,” and we’re doing it hot and heavy right now. Lubing up politicians and then siccing them on our competitors before they do it to us. Once the new, and completely untenable, health care mandates hit, America will be a never-ending version of Shindler’s List – and EVERYBODY will be on it.

This is what the coffee house liberals never understand until it is too late: Even in the most strictly regulated “Workers’ Paradise,” the meanest and sharpest will still be running all the business. The only difference is that we’ll be running government too.

Just a reminder for all those people who will slobber over this facebook posting, certain that it’s the most brilliant piece of writing since Palin’s last facebook posting, this is, like every other posting she’s made, so generic in tone it could have been written by any conservative-minded writer on earth.

TheBlueSite on April 23, 2010 at 11:07 AM

Generic? It seems pretty specific to me. She singles out exactly what’s wrong with this “reform” bill and explains why. You sound like one of those idiots on the left who listens to her speak for 45 minutes and then proclaim that she somehow didn’t say anything of substance in that entire time.

Does anyone here actually support Palin’s stance on big oil? In most other threads, most here are against windfall profit taxes, but when Palin did it, and brags about that stuff in this posting, we support it?

Could have been written by any conservative Hmmmmm lets think about this bit of genius. Anyone could have wrote it yet no one else HAD the GUTS. Sometimes trools (a troll crossed with a fool) often without realizing say things that are so very true and make the opposite point of what they intended.

Does anyone here actually support Palin’s stance on big oil? In most other threads, most here are against windfall profit taxes, but when Palin did it, and brags about that stuff in this posting, we support it?

So, wait, which is it? Is Obama “declaring war on Wall Street” or is he helping Wall Street too…much? I can’t remember, is he a socialist or a “crony capitalist”?

Gosh, it’s so hard to keep it all straight when the criticisms contradict each other!

Proud Rino on April 23, 2010 at 11:07 AM

“Wall Street” is a capitalist trading institution(s), in which large firms, small firms, and individuals participate in investing in business. A few large firms such as Goldman are not “Wall Street”, and a crony capitalist situation in which a few connected firms operate at a marked advantage is not good for capitalism (Wall Street, business in general and individuals).

And “crony capitalism” and “socialism” are not opposites. Crony capitalism is socialism by proxy. It’s how Fascists and National Socialists exercised C&C over their command economies.

Adam Smith wrote about this in his book “The Wealth of Nations” only he was describing how established merchants would use their wealth and influence to persuade governments to enact trade tariffs that would benefit the merchant to the detriment of his competitors.

The only difference between this and Obama bailing out the UAW and their pension fund by keeping GM in business is here big finance is trying to influence what regulations get put into place in the hope that the final version will play to their strength and weaken their competitors or at least, not put themselves out of business entirely.

It’s all influence peddling; making people and companies dependent on Obama and his whims. It’s the public version of organized crime’s protection racket, or organized labor’s extortion racket.

The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It’s a gangster state, running on gangster economics, and even prices can’t be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can’t stop it, but we should at least know where it’s all going.

My question – how does she plan to DO anything about it on a national level? That will be an order of magnitude nastier than her Alaskan governorship, and quitting will NOT be an option. She must know that playing Brave Sir Robin in such a manner from the White House will quite possibly destabilize the nation.

Does anyone here actually support Palin’s stance on big oil? In most other threads, most here are against windfall profit taxes, but when Palin did it, and brags about that stuff in this posting, we support it?

At this point Palin could write a Facebook post about how two plus two equals four, and her fans would about be ready to take it on par with the words of Jesus.
Dark-Star on April 23, 2010 at 11:21 AM

At this point Palin could write a scientific paper proving conclusively that she has figured out a method for humans to travel faster than light and her detractors would flail about screaming “Stooopid hayseed!”

Dodd’s bill DOES retain the “too big to fail.” The confusing part is that Obama is discussing this publicly as though that’s not true.

He’s spinning this as a populist reform bill, and it’s really not close to that. The regional banks will not benefit.

Moreover, it truly puts terrific powers in the executive branch, which I’ve been waiting to hear what the industry and economists really think about that strategy. It might strengthen some of the oversight with political power, or it might, indeed, simply make the presidency the head of the corporate state, with all those powers.

If you don’t like that idea of consolidating economic powers into one branch? Then you’re not going to like this bill. If you do, then you will.

And they aren’t even smart enough to realize it won’t work. Surprised pundits don’t understand why the public is so anti-elitist. I swear the nation is being run but a bunch of inbred morons who got into the best colleges due to donations from their alumni parents.

Could have been written by any conservative Hmmmmm lets think about this bit of genius. Anyone could have wrote it yet no one else HAD the GUTS. Sometimes trools (a troll crossed with a fool) often without realizing say things that are so very true and make the opposite point of what they intended.
jainphx on April 23, 2010 at 11:20 AM

I’d love to see the debate going on inside the moonbat’s head right now.

After “graciously” letting Palin go first, Obama answers every question with: “I could have said that!”

The derivatives market went largely unsupervised in the years preceding the collapse, for instance, and better oversight is needed on that segment.

Why would you say that, Allahpundit? If you’ll recall the height of the financial crisis in late ’08, when the credit markets were seizing up, the ‘unsupervised’ derivatives market was the one area in which trading continued relatively unimpeded, helping to damp out the mounting default risks for many firms. The notion that the derivatives markets made the collapse worse, and wouldn’t have done so if only the government regulated them heavily, is another liberal myth which informed conservatives must challenge.

Strawman? Palin instituted record taxes on oil companies, the state of Alaska took 75% of revenue from every barrel of oil, then passed it onto the people of Alaska in the form of a yearly payment.

She brags about her taking on big oil in her posting here, yet so many of us so soon forget what her record on big oil is!

Why are we praising the economic posts of a woman whose actions, I would assume, are shared by only a handful of people here? The point is, look deeper into these things. This is a manufactured political celebrity whose record doesn’t match with the rhetoric for the most part.

So, do we follow Palin and hope she doesn’t do what Obama did (claim one thing, then in office do another?)

Just a reminder for all those people who will slobber over this facebook posting, certain that it’s the most brilliant piece of writing since Palin’s last facebook posting, this is, like every other posting she’s made, so generic in tone it could have been written by any conservative-minded writer on earth.

Without a solid resume to back up what is essentially generic boilerplate postings, I see no reason to think she has anything special to offer the country in terms of governance.

TheBlueSite on April 23, 2010 at 11:07 AM

You don’t really pay much attention, do you? She has, on numerous occasions framed issues by relating to what she did in Alaska, including this essay. What other political voices out there speak in any voice other than boilerplate?

Tell me what other politician can speak from actual experience on any of these issues. When Palin discusses issues, most of the time she frames them around her own experiences. Even in her book, which you probably haven’t read, she addresses the issues without making it a lecture. She has always tied the issue to how it affected her as a governor or as a citizen or how it affects the average citizen today.

You, and the other haters always criticize her for not discussing issues, but in reality all it shows is your blind hatred for the woman. Over the last year, there has been no one on either side that has discussed issues more than Palin. If you don’t agree, simply look at her body of work on FB, and her various op-eds. For someone who supposedly doen’t read, she sure seems to back up her words with multiple links and examples to support her statements.

Face it. She could come up with the solution and action plan to solve all the problems in the mid-east or spell out in detail how to fix the national debt, and you’d claim that she doesn’t have the experience and therefore her comments are unsubstantial.

Does anyone here actually support Palin’s stance on big oil? In most other threads, most here are against windfall profit taxes, but when Palin did it, and brags about that stuff in this posting, we support it?

TheBlueSite on April 23, 2010 at 11:19 AM

Except that none of that tax goes to Gov’t. It goes directly to the people of Alaska who were generous enough to lease their land to Big Oil in exchange for cash money.

What is she going to do on the national Level, did Dark Star swerve into something here? You don’t want her on a national level, but yet you want her to do something on the national level. Yes trools are all over the place. This is exactly the argument, WE NEED HER and people like her ON THE NATIONAL LEVEL. Somewhere a village is missing it’s idiot, hey village we found your dark star.

Why are we praising the economic posts of a woman whose actions, I would assume, are shared by only a handful of people here? The point is, look deeper into these things. This is a manufactured political celebrity whose record doesn’t match with the rhetoric for the most part.

So, do we follow Palin and hope she doesn’t do what Obama did (claim one thing, then in office do another?)

TheBlueSite on April 23, 2010 at 11:29 AM

Frankly, good ideas usually arise organically as much as anything.

I think people, for example, did support the consumer protection law passed earlier this year. The credit card companies were getting way too into tricks and sneaky crud. That bill arose from Democrats, and the public pretty much agreed.

It doesn’t matter to me where the thinking comes from. If it makes sense, then it makes sense.

The other approach, which you’re taking, is all about political personalities. Frankly, that’s a luxury game of politics that I don’t think the majority of us can afford any longer.

What is she going to do on the national Level, did Dark Star swerve into something here? You don’t want her on a national level, but yet you want her to do something on the national level. Yes trools are all over the place. This is exactly the argument, WE NEED HER and people like her ON THE NATIONAL LEVEL. Somewhere a village is missing it’s idiot, hey village we found your dark star.

Does anyone here actually support Palin’s stance on big oil? In most other threads, most here are against windfall profit taxes, but when Palin did it, and brags about that stuff in this posting, we support it?

TheBlueSite on April 23, 2010 at 11:19 AM

Apparently, you are as ignorant as your writing makes you appear to be.

Oil in Alaska is the property of the people, not the State. It’s in the constitution. The State is merely the trustee for the people.

When the oil is sold, the profits must be given to the people. Crony politicians in the past kept the sale price low in exchange for love payments of either cash, benefits, or some such.

Sarah raised the amount of profit the people earned on the sale of the people’s property. It’s not a tax. It’s a royalty.

Now please show that you are merely ignorant by simply shutting your pie hole. Of course, I suspect that this is all political in which case your pie hole will continue to spew BS and smell funny.

Did you mean to ask how Palin gets a pass for re-negotiating royalties on oil leases? See, taxes are passed by government diktat, while contractual arrangements are made through negotiations that result in a fair trade between two parties.

The reasoning behind the bill is that consolidating the power will give more “bite” to the regulators. The downside of that attractive idea is that the “biter” will be the executive branch, which as Palin points out, is completely packed with the Big Bank industry guys.

What Does Windfall Tax Mean?A tax levied by governments against certain industries when economic conditions allow those industries to experience above-average profits. Windfall taxes are primarily levied on the companies in the targeted industry that have benefited the most from the economic windfall, most often commodity-based businesses.

The Oil companies in Alaska, have contracts with the state/Federal government to extract Oil form LAND IN ALASKA. They aren’t making something out of nothing. They aren’t building sprockets, or bicycles. They are extracting the most valuable resource on earth. The oil is Alaska’s biggest resource. The State of Alaska and it’s people should be able to benefit from it.

From my reading, she negotiated a much better agreement on behalf of Alaskans. That was why so many of those guys went to jail there, because the cronyism was beyond mere influence, it was downright corrupt.

Does anyone here actually support Palin’s stance on big oil? In most other threads, most here are against windfall profit taxes, but when Palin did it, and brags about that stuff in this posting, we support it?

TheBlueSite on April 23, 2010 at 11:19 AM

There ya go again with stupid boilerplate from the lefties. Palin followed the state’s constitution. She changed the formula for determining the royalties paid by the oil companies to the state of Alaska. Go to the library and get the book, “Sarah Takes On Big Oil”, written by two trade journalists with no ties to Palin. You might actually learn something.

At best, it looks like a swing to the opposite, but that may not be any better.

Moreover, I can’t see that NOT knowing how the SEC or the rating agencies played fast and loose, as we’re now becoming painfully aware that they did, is beneficial to us. If it’s too centralized, then the access to real information will be even less transparent.

Does anyone here actually support Palin’s stance on big oil? In most other threads, most here are against windfall profit taxes, but when Palin did it, and brags about that stuff in this posting, we support it?

TheBlueSite on April 23, 2010 at 11:19 AM

There ya go again with stupid boilerplate from the lefties. Palin followed the state’s constitution. She changed the formula for determining the royalties paid by the oil companies to the state of Alaska. Go to the library and get the book, “Sarah Takes On Big Oil”, written by two trade journalists with no ties to Palin. You might actually learn something.

The derivatives market went largely unsupervised in the years preceding the collapse, for instance, and better oversight is needed on that segment.

Mr. Pundit, sir, according to Roll Call, derivative regulation is not in this ‘reform’ bill, and the democrat party leadership is resistant to including it in the bill preferring that derivative regulation be an amendment to the bill.